Consultation response on employee share schemes NIC elections

The government has published their response to this consultation which states that there will be no change.

Background

A consultation was published in April 2016 on whether companies with non tax-advantaged share schemes require the continued availability of a National Insurance Contribution (NIC) election.

A NIC election is the means of legally transferring to the employee the Employer’s Class 1 NIC obligation on the occasion of chargeable events in connection with employment-related securities options, and with restricted or convertible employment-related securities.

This consultation was designed to gather views and evidence from companies with non tax-advantaged share schemes about whether there is a need for the continued availability of a NIC election. NIC agreements will continue to be available.

Response

Government has carefully considered the responses generated by this consultation and whilst there has been a change to the US accounting rules, it is clear that there is still a need to retain the NIC elections facility. They provide a protection that is not provided under NIC agreements. Therefore Government is to take no further action and retain the facility to make NIC elections.